EXHIBIT 10.19
NAVARRE CORPORATION
COMMON STOCK PURCHASE WARRANT
DW - __________
Navarre Corporation, a Minnesota corporation (the "COMPANY"), hereby
agrees that, for value received, Delphi Financial Corp., Minneapolis, Minnesota,
or its assigns, is entitled, subject to the terms set forth below, to purchase
from the Company at any time or from time to time after May 1, 1998, and before
5:00 p.m., Minneapolis, Minnesota time, on May 1, 2002, Three Hundred Eighty
Thousand Nine Hundred Fifty-Three (380,953) shares of the no par value Common
Stock of the Company (the "COMMON STOCK"), at an exercise price of $2.625 which
exercise price is subject to adjustment as provided herein.
1. EXERCISE OF WARRANT. The purchase rights granted by this Warrant
shall be exercised (in minimum quantities of 1,000 shares) by the holder
surrendering this Warrant with the form of exercise attached hereto duly
executed by such holder, to the Company at its principal office, accompanied by
payment, in cash or by cashier's check payable to the order of the Company, of
the purchase price payable in respect of the Common Stock being purchased. If
less than all of the Common Stock purchasable hereunder is purchased, the
Company will, upon such exercise, execute and deliver to the holder hereof a new
Warrant (dated the date hereof) evidencing the number of shares of Common Stock
not so purchased. As soon as practicable after the exercise of this Warrant and
payment of the purchase price, the Company will cause to be issued in the name
of and delivered to the holder hereof, or as such holder may direct, a
certificate or certificates representing the shares purchased upon such
exercise. The Company may require that such certificate or certificates contain
on the face thereof a legend substantially as follows:
"The transfer of the shares represented by this certificate is restricted
pursuant to the terms of a Common Stock Purchase Warrant dated May 1, 1998,
issued by Navarre Corporation, a copy of which is available for inspection at
the offices of Navarre Corporation Transfer may not be made except in accordance
with the terms of the Common Stock Purchase Warrant. In addition, no sale, offer
to sell or transfer of the shares represented by this certificate shall be made
unless a registration statement under the Federal Securities Act of 1933, as
amended (the "ACT"), with respect to such shares is then in effect or an
exemption from the registration requirements of the Act is then in fact
applicable to such shares."
2. NEGOTIABILITY AND TRANSFER. This Warrant is issued upon the
following terms, to which each holder hereof consents and agrees:
(a) Until this Warrant is duly transferred on the books of the
Company, the Company may treat the registered holder of this Warrant as absolute
owner hereof for all purposes without being affected by any notice to the
contrary.
(b) Each successive holder of this Warrant, or of any portion of
the rights represented thereby, shall be bound by the terms and conditions set
forth herein.
3. ANTIDILUTION ADJUSTMENTS. If the Company shall at any time
hereafter subdivide or combine its outstanding shares of Common Stock, or
declare a dividend payable in Common Stock, the exercise price in effect
immediately prior to the subdivision, combination or record date for such
dividend payable in Common Stock shall forthwith be proportionately increased,
in the case of combination, or proportionately decreased, in the case of
subdivision or declaration of a dividend payable in Common Stock, and each share
of Common Stock purchasable upon exercise of this Warrant, immediately preceding
such event, shall be changed to the number determined by dividing the then
current exercise price by the exercise price as adjusted after such subdivision,
combination or dividend payable in Common Stock.
No fractional shares of Common Stock are to be issued upon the
exercise of the Warrant, but the Company shall pay a cash adjustment in respect
of any fraction of a share which would otherwise be issuable in an amount equal
to the same fraction of the market price per share of Common Stock on the day of
exercise as determined in good faith by the Company.
In case of any capital reorganization or any reclassification of the
shares of Common Stock of the Company, or in the case of any consolidation with
or merger of the Company into or with another corporation, or the sale of all or
substantially all of its assets to another corporation, which is effected in
such a manner that the holders of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a part of such reorganization, reclassification, consolidation, merger
or sale, as the case may be, lawful provision shall be made so that the holder
of the Warrant shall have the right thereafter to receive, upon the exercise
hereof, the kind and amount of shares of stock or other securities or property
which the holder would have been entitled to receive if, immediately prior to
such reorganization, reclassification, consolidation, merger or sale, the holder
had held the number of shares of Common Stock which were then purchasable upon
the exercise of the Warrant. In any such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Company) shall be made
in the application of the provisions set forth herein with respect to the rights
and interest thereafter of the holder of the Warrant, to the end that the
provisions set forth herein (including provisions with respect to adjustments of
the exercise price) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter deliverable
upon the exercise of the Warrant.
When any adjustment is required to be made in the exercise price,
initial or adjusted, the Company shall forthwith determine the new exercise
price, and
(a) prepare and retain on file a statement describing in reasonable
detail the method used in arriving at the new exercise price; and
(b) cause a copy of such statement to be mailed to the holder of the
Warrant as of a date within ten (10) days after the date when the circumstances
giving rise to the adjustment occurred.
4. TRANSFERABILITY; REGISTRATION RIGHTS. Prior to making any
disposition of the Warrant or of any Common Stock purchased upon exercise of the
Warrant, the holder will give written notice to the Company describing briefly
the manner of any such proposed disposition. The holder will not make any such
disposition until (i) the Company has notified him that, in the opinion of its
counsel, registration under the Act is not required with respect to such
disposition, or (ii) a registration statement covering the proposed distribution
has been filed by the Company and has become effective. The holder then will
make any disposition only pursuant to the conditions of such opinion or
registration. The Company agrees that, upon receipt of written notice from the
holder hereof with respect to such proposed distribution, it will use its best
efforts, in consultation with the holder's counsel, to ascertain as promptly as
possible whether or not registration is required, and will advise the holder
promptly with respect thereto, and the holder will cooperate in providing the
Company with information necessary to make such determination.
If, at any time after the date hereof and prior to the expiration of
six (6) years from the date hereof, the Company shall propose to file any
registration statement under the Securities Act of 1933, as amended, covering a
public offering of the Company's Common Stock and permitting the inclusion of
shares of selling shareholders, it will notify the holder hereof at least thirty
(30) days prior to each such filing and will include in the registration
statement (to the extent permitted by applicable regulation) the Common Stock
purchased by the holder or purchasable by the holder upon the exercise of the
Warrant to the extent requested by the holder hereof. Notwithstanding the
foregoing, the number of shares of the holders of the Warrants proposed to be
registered thereby shall be reduced pro rata with any other selling shareholder
(other than the Company) upon the request of the managing underwriter of such
offering subject to the prior rights of any other selling shareholder that give
it first priority in any such registration. If the registration statement or
offering statement filed pursuant to such forty-five (45) day notice has not
become effective within six months following the date such notice is given to
the holder hereof, the Company must again notify such holder in the manner
provided above.
At any time after the date hereof and prior to the expiration of
four (4) years from the date hereof, and provided that a registration statement
on Form S-3 (or its equivalent) is then available to the Company, and on a
one-time basis only, if the holders of 51% or more of the warrants and the
shares acquired upon exercise of the Warrants request the registration of the
shares on Form S-3 (or its equivalent), the Company shall promptly thereafter
use its best efforts to effect the registration under the Securities Act of
1933, as amended, of all such shares which such holders request in writing to be
so registered, and in a manner corresponding to the methods of distribution
described in such holders' request.
All expenses of any such registrations referred to in this Section
4, except the fees of counsel to such holders and underwriting commissions or
discounts shall be borne by the Company.
The Company will mail to each record holder, at the last known post
office address, written notice of any exercise of the rights granted under this
Section 4, by certified or registered mail, return receipt requested, and each
holder shall have thirty (30) days from the date of deposit of such notice in
the U.S. Mail to notify the Company in writing whether such holder wishes to
join in such exercise.
The Company will furnish the holder hereof with a reasonable number
of copies of any prospectus included in such filings and will amend or
supplement the same as required during the period of required use thereof. The
Company will maintain the effectiveness of any shelf registration statement or
the offering statement filed by the Company, whether or not at the request of
the holder hereof, for at least six (6) months following the effective date
thereof.
In the case of the filing of any registration statement, and to the
extent permissible under the Act and controlling precedent thereunder, the
Company and the holder hereof shall provide cross indemnification agreements to
each other in customary scope covering the accuracy and completeness of the
information furnished by each.
The holder of the Warrant agrees to cooperate with the Company in
the preparation and filing of any such registration statement or offering
statement, and in the furnishing of information concerning the holder for
inclusion therein, or in any efforts by the Company to establish that the
proposed sale is exempt under the Act as to any proposed distribution.
The Company shall have no obligation under this Section 4 to
register any of the shares of the holders if, in accordance with Rule 144,
promulgated under the Securities Act of 1933, as amended, the holder may sell
all his shares of common stock obtained upon an exercise of this Warrant within
ninety (90) days immediately following the request for registration.
5. CASHLESS EXERCISE OPTION.
(a) Provided the Company's Common Stock shall then be traded on
an exchange or quoted by NASDAQ or otherwise traded as described in 5(d) hereof,
the holder of this Warrant shall have the right to require the Company to
convert this Warrant (the "CONVERSION RIGHT"), at any time from May 1, 1998 and
prior to its expiration, into shares of Common Stock as provided for in this
Section 5. Upon exercise of the Conversion Right, the Company shall deliver to
the holder (without payment by the holder of any exercise price) that number of
shares of Common Stock equal to the number of shares of Common Stock resulting
from multiplying the number of shares of Common Stock issuable to the holder
upon exercise of the Warrant (and desired to be converted) times the quotient
obtained by dividing (x) the value of the Warrant at the time the Conversion
Right is exercised (determined by subtracting the exercise price for one Warrant
Share in effect immediately prior to the exercise of the Conversion Right from
the Fair Market Value (as determined below) for one Warrant Share immediately
prior to the exercise of the Conversion Right) by (y) the Fair Market Value of
one share of Common Stock immediately prior to the exercise of the Conversion
Right.
(b) The Conversion Right may be exercised by the holder, at any
time or from time to time, prior to its expiration, on any
business day, by delivering a written notice (the
"CONVERSION NOTICE") to the Company at the offices of the
Company exercising the Conversion Right and specifying (i)
the total number of shares of Stock the Warrant holder will
purchase pursuant to such conversion, and (ii) a place, and
a date not less than five (5) nor more than twenty (20)
business days from the date of the Conversion Notice for the
closing of such purchase.
(c) At any closing under Section 5(b) hereof, (i) the holder
will surrender the Warrant, (ii) the Company will deliver to the holder a
certificate or certificates for the number of shares of Common Stock issuable
upon such conversion, together with cash, in lieu of any fraction of a share,
and (iii) the Company will deliver to the holder a new Warrant representing the
number of shares, if any, with respect to which the Warrant shall not have been
exercised.
(d) "FAIR MARKET VALUE" of a share of Common Stock as of a
particular date (the "DETERMINATION DATE") shall mean:
(i) If the Company's Common Stock is traded on an exchange
or is quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") National Market System, or the Small Cap Market, then the
average closing or last sale prices, respectively, reported for the ten (10)
business days immediately preceding the Determination Date.
(ii) If the Company's Common Stock is not traded on an
exchange or on the NASDAQ National Market System, or the Small Cap Market, but
is traded in the over-the-counter market, then the average of the closing bid
and asked prices reported for the ten (10) business days immediately preceding
the Determination Date.
(iii) If the Company's Common Stock is not publicly traded
and there has been a bona fide sale for cash on an arm's-length basis within 45
days prior to the Determination Date of such Common Stock by the Company
privately to one or more investors unaffiliated with the Company (a "Qualifying
Sale"), then the most recent such sales price.
(iv) If the Company's Common Stock is not publicly traded
and there has been no Qualifying Sale, then the appraised fair market value of
such stock, as determined by mutual agreement of the Company and the holder of
the Warrant; or if the parties cannot agree to such valuation, then each of the
Company and the holder shall select an arbitrator and such arbitrators shall
select a third, and such three arbitrators shall determine (in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, such
expenses to be borne equally by the parties) the fair market value (without any
discount for lack of marketability or minority interest) of a share of Common
Stock of the Company.
6. NOTICES. The Company shall mail to the registered holder of the
Warrant, at his last known post office address appearing on the books of the
Company, not less than fifteen (l5) days prior to the date on which (a) a record
will be taken for the purpose of determining the holders of Common Stock
entitled to dividends (other than cash dividends) or subscription rights, or (b)
a record will be taken (or in lieu thereof, the transfer books will be closed)
for the purpose of determining the holders of Common Stock entitled to notice of
and to vote at a meeting of stockholders at which any capital reorganization,
reclassification of shares of Common Stock, consolidation, merger, dissolution,
liquidation, winding up or sale of substantially all of the
Company's assets shall be considered and acted upon.
7. RESERVATION OF COMMON STOCK. A number of shares of Common Stock
sufficient to provide for the exercise of the Warrant upon the basis herein set
forth shall at all times be reserved for the exercise thereof.
8. MISCELLANEOUS. Whenever reference is made herein to the issue or
sale of shares of Common Stock, the term "COMMON STOCK" shall include any stock
of any class of the Company other than preferred stock with a fixed limit on
dividends and a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
Upon written request of the holder of this Warrant, the Company will
promptly provide such holder with a then current written list of the names and
addresses of all holders of warrants originally issued under the terms of, and
concurrent with, this Warrant.
The representations, warranties and agreements herein contained
shall survive the exercise of this Warrant. References to the "holder of"
include the immediate holder of shares purchased on the exercise of this
Warrant, and the word "holder" shall include the plural thereof. This Common
Stock Purchase Warrant shall be interpreted under the laws of the State of
Minnesota.
All shares of Common Stock or other securities issued upon the
exercise of the Warrant shall be validly issued, fully paid and non-assessable,
and the Company will pay all taxes in respect of the issuer thereof.
Notwithstanding anything contained herein to the contrary, the
holder of this Warrant shall not be deemed a stockholder (including, no right to
vote on any matters coming before the shareholders) of the Company for any
purpose whatsoever until and unless this Warrant is duly exercised.
IN WITNESS WHEREOF, this Warrant has been duly executed by Navarre
Corporation, this 1st day of May, 1998.
NAVARRE CORPORATION
By:
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Title:
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WARRANT EXERCISE FORM
To be signed only upon exercise of Warrant.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, __________________ of the shares of Common
Stock of Navarre Corporation to which such Warrant relates and herewith makes
payment of $___________ therefor in cash or by certified check, and requests
that such shares be issued and be delivered to, _________________________, the
address for which is set forth below the signature of the undersigned.
Dated:
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(Taxpayer's I.D. Number) (Signature)
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(Address)
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ASSIGNMENT FORM
To be signed only upon authorized transfer of Warrant.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto ______________________________ the right to purchase shares of
Common Stock of Navarre Corporation to which the within Warrant relates and
appoints _________________, attorney, to transfer said right on the books of
Navarre Corporation with full power of substitution in the premises.
Dated:
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(Signature)
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(Address)
CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant pursuant to Section 5)
The undersigned hereby irrevocably elects a cashless exercise of the
right of purchase represented by the within Common Stock Purchase Warrant for,
and to purchase thereunder, ______________________ shares of Common Stock, as
provided for in Section 5 therein.
If said number of shares shall not be all the shares purchasable
under the within Common Stock Purchase Warrant, a new Warrant is to be issued in
the name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher number of shares.
Please issue a certificate or certificates for such Common Stock in
the name of, and pay any cash for any fractional shares to:
NAME
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(PLEASE PRINT NAME)
ADDRESS ----------------------------------------------------------------
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SOCIAL SECURITY NO. -----------------------------------------------------------
SIGNATURE
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NOTE: The above signature should correspond exactly with the name on the first
page of this Common Stock Purchase Warrant or with the name of the assignee
appearing in the assignment form on the preceding page.
